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Oil And Gas Properties
9 Months Ended
Sep. 30, 2013
Extractive Industries [Abstract]  
Oil and gas properties

NOTE 4 – OIL AND GAS PROPERTIES

 

On February 9, 2012, the Company purchased a 30 percent gross working interest and a 26.25 percent net revenue interest in six unproved oil and gas leases in Cowley County, Kansas for $140,400. The six leases combined contain approximately 1,025 acres. Subsequent to purchase the company capitalized $11,934 in support equipment and $38,519 in development costs. During the six months ended June 30, 2013 the Company capitalized an additional $49,634 in development costs related to these leases.

 

On May 14, 2012 the Company purchased a 35 percent gross working interest and a 28 percent net revenue interest in 98 acres of unproved oil and gas leases in Stafford County, Kansas for $12,569. Concurrent with this purchase, the Company paid $22,637 in additional development costs, and $66,181 for support equipment, for an aggregate purchase price of $101,387. As of December 31, 2012, pursuant to a ceiling test analysis, the Company recognized an impairment expense on these leases in the amount of $6,484.

 

On May 14, 2012 the Company purchased a 13 percent gross working interest and a 10 percent net revenue interest in 70 acres of unproved oil and gas leases in Butler County, Kansas for $17,208. Concurrent with this purchase, the Company paid $27,401 in additional development costs, and $17,542 for support equipment, for an aggregate purchase price of $62,151. Subsequent to purchase the Company capitalized $479 in support equipment. As of December 31, 2012, pursuant to a ceiling test analysis, the Company recognized an impairment expense on these leases in the amount of $7,464. During the six months ended June 30, 2013 the Company capitalized an additional $37,009 in development costs related to these leases.

 

On February 5, 2013 the Company sold a 30 percent gross working interest and a 30 percent net revenue interest in six oil and gas leases located in Pratt County, Kansas for $100,000. This amount was deducted from funds payable from the Company to the purchasing entity on July 18, 2013. Pursuant to this transaction the Company transferred a 30 percent interest in all related support equipment and asset retirement obligations.

 

During the nine months ended September 30, 2013 the Company incurred certain work-over costs and other improvements to certain of its wells. The Company paid $72,573 for these improvements, which have been added to the book value of the wells.

 

Through September 30, 2013, the Company established an asset retirement obligation of $112,652 for the wells acquired by the Company, which was capitalized to the value of the oil and gas properties. The wells have an estimated useful life of 25 years. Total accretion expense on the asset retirement obligation was $34,591, leaving an ending net balance of $147,243 at September 30, 2013.